Passionate about IP! Since June 2003 the IPKat has covered copyright, patent, trade mark, info-tech, privacy and confidentiality issues from a mainly UK and European perspective. The team is Eleonora Rosati, Annsley Merelle Ward, Neil J. Wilkof, and Merpel. Nicola Searle is currently on sabbatical. Read, post comments and participate! E-mail the Kats here

The team is joined by GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopolou, Mathilde Pavis, and Eibhlin Vardy

Friday, 27 February 2015

This Kat is spending part of her coveted lunch time to write on one of her dearest topics (see earlier IPKat posts here): the late polar bear Knut - arguably the "first celebrity zoo animal" - and centre of numerous alluring trade mark issues and intriguing trade mark disputes.

Our readers may recall Knut's rise to stardom and his evolution into a lifestyle "brand", from cuddly cub to famous celebrity zoo animal with a massive marketing machine until his untimely death at the age of four at Berlin zoo in March 2010. German media now reports that a polar bear cub born at the zoo of Rostock, northeastern Germany, in December 2014 may be the next polar bear "superstar". US based news outlet CNN already called the cub "adorable", so that international fame might indeed be in reach...

Knut - in his heyday

History appears to be repeating itself in other ways too: Rostock zoo has decided to involve the general public in naming the cub and is asking for suggestions to be emailed to the zoo's press department until 10 March 2015. Only condition, it needs to be a "nordic sounding" name, such as Knut or Lars.

Now, it seems like it was only yesterday when I was writing my tongue in cheek article "Knut, Flocke, and Co: the bear facts revealed"; JIPLP 2008, pages 764-774, (still available in full here). In that article I wrote about the dangers of so-called ‘public naming campaigns’ and how not taking trade mark protection seriously at an early stage when marketing the birth of high-profile zoo animals can result in serious problems. Infamously, Knut's name, which had also been determined by a public naming campaign, had been leaked to the media before Berlin zoo had filed for trade mark protection. Let's hope Rostock zoo has learnt a lesson and has its IP in place before going public with the "nordic" name. By the way, I propose to give the cub the lovely Scandinavian name Birger....

The UK Government will improve protection to make sure businesses are not exposed to unnecessary and baseless accusations ... in response to the Law Commission’s Report.
Protection against groundless threats of infringement proceedings will be retained for patents, trade marks, registered and unregistered design right. A number of new reforms will also be introduced. These are:

making sure that the threats provisions are much clearer [indeed, the fact that they are drafted in such convoluted terms, which differ as between IP rights, is a real headache. This Kat has also never received a convincing answer to the question whether a statement posted on a website that indicates that the manufacture or sale of a particular product will be treated as an infringement might constitute a groundless threat. Suggestions?]

making it easier for parties to make good faith attempts to settle an IP infringement dispute before litigation [but surely, if the parties are making good faith attempts to settle infringement disputes, there already exist ways of doing this without making groundless threats to sue?]

stopping legal advisers from being subject to threats and accusations, when the dispute is between the parties that they represent. [This is a pity, says Merpel, who never tires of reading L'Oréal (UK) Ltd & Another v Johnson & Johnson & Another[2000] EWHC Ch 129 in which Mr Justice "Lightning" Lightman held a relatively amicable solicitor's letter to be a threat. Lightman J's characterisation of the letter can be found below]

Threats of legal action for IP infringement can cause significant commercial damage to small businesses. They are costly and disruptive, drive customers away and stop business from selling goods and services. ...”

Says Hogan Lovells' Alastair Shaw,

"At present in trade mark and design cases there is often a certain amount of shadow-boxing before the full extent of the alleged wrongdoing becomes clear to the likely defendant, by which time positions on both sides can become entrenched. There may be some doubts about whether the position will be improved in practice for legal representatives if the Government follows through on its proposal that they must show that they were acting on instructions to exempt them from liability for threats [Hmm. This Kat quite likes the idea of lawyers being able to show that they are acting under instruction, particularly if they bill him for the work they've done ...]. But, overall, the Government's responses should be seen as a very positive move".

Merpel has an idea. why not have a system of graduated threats?

**********************************************

The Government response to the Law Commission’s Report (Law Com No.346) “Patents, Trade Marks and Design Rights:
Groundless Threats" (26 February 2015) is here

Mr Justice Lightman's summary of the letter in question reads like this, at para 16:

"The Letter is the work of a master of Delphic utterances who uses all his skills to say everything and nothing and to convey an enigmatic message which has the same effect on the recipient as a threat or adverse claim whilst disclaiming to be either. He goes beyond merely reserving his clients' rights: he makes clear that no decision has yet been made to sue, but likewise makes clear that others who used the Words on their packaging after pressure from the Defendants succumbed to that pressure and desisted; that the Defendants thought that the Claimants had unfairly sought to benefit from the Defendants' goodwill; that the Defendants had six years to commence legal proceedings; and that the Defendants would afford no comfort in respect of the possibility of such proceedings".

For those Kat readers who look favourably at the smartphone wars of the last few years, you may be heartened to know that similar patent wars may erupt as well in the Chinese mobile industry, and more quickly that you would think, if one is to believe the observations made in an article that appeared on February 13, 2015 on reuters.com. Entitled “Qualcomm deal sparks China smartphone skirmishes”, the article focuses on how ZTE Corporation, the giant telecommunications equipment manufacturer, is ramping up to take advantage of the new legal environment that has resulted from the settlement that Qualcomm reached on February 9 with the Chinese National Development and Reform Commission (NDRC) over claims that the company’s licensing practices had violated the country’s Anti-Monopoly Law. This Kat will not review all of the various provisions that comprise this intricate agreement (Kat readers who wish to do so are urged to consider tthis article that appeared on Forbes.com).

Rather, we will focus on one key provision, whereby Qualcomm had to end its practice of cross-licensing agreements that had the effect of giving smaller customers of the company free access of the patent portfolio belonging to more established Qualcomm customers. The upshot is that ZTE and similarly-situated Chinese companies, such as Huawei Technologies, which are reported to hold substantial essential patents for wireless technology, may well began to aggressively seek royalty payments, as well a court enforcement of its patent rights, from other companies engaged in the smartphone space. Of particular interest is the suggestion that ZTE may be targeting upstart handset companies for legal action and, in particular, it may go after Xiaomi, the high-flying Chinese handset manufacturer. What is striking about this possibility is how the Reuters article describes a legal and business environment that sounds more and more like the US and other developed markets. Consider the following:

1. In facing the real possibility that companies such as ZTE will be more aggressive in seeking to monetise and enforce their IP rights, the secretary general of the Mobile China Alliance stated that “[f]or the first time, the settlement is forcing domestic manufacturers to recognize the value of IP and consider how to use it strategically, which companies do in the West.”

2. The president of Xiaomi, while not commenting specifically on a possible dispute with ZTE, observed that increased threats and litigation is typical for a high-flying start-up. He went on: “This is true of any company, not just Chinese companies”. In response, the company is working on boosting its relatively small patent portfolio—“We’ve been focusing on building up our own IP. It’s going to take some time.”

3. For its part, ZTE stated that the Qualcomm settlement “is positive for the development of intellectual property rights in China, and will help promote fair competition for technology innovators.” One possible way to do so was suggested in the article. Thus, ZTE is reported to be exploring how to make royalties a material part of its IP activities (“They’re taking this extremely seriously”.)

4. There is a recognition that this change may drive some smaller mobile phones (heretofore the beneficiary of what the free-licensing regime) from the market in the face of increased costs for research, litigation and licensing. Those that survive cam be expected to engage in increased patenting activity.

While all of this sounds so “Western” in approach, one wonders whether the developing reality may be more nuanced that that. In a word, how will the Chinese government fit in? This Kat has been considering what the emerging contours of Chinese IP policy might look like (here and here); the Qualcomm settlement itself can bee seen in the context of broader Chinese IP policy . Indeed, the article itself offers a tantalizing suggestion that any potential smartphone war may not be free of governmental influence, writing that while

“legal jostling will intensify, … there will not likely be an immediate eruption of high-profile court battles. ‘It would be extremely costly and messy for ZTE to take Xiaomi to court, especially as a Beijing company with ties to power,’“

quoting the secretary general of the Mobile China Alliance. Moreover, one wonders how Chinese policy makers will come down on the debate of whether it is good, or bad, to drive out young mobile companies, and whether governmental policy might be brought to bear. Stay tuned.

If
the COLOURBLIND case (Pangyrus Ltd v OHIM, RSVP Design Ltd, CaseT-257/11) had been a movie, it would have
secured a nomination for its intricate screenplay, in the spirit of the recent Academy Awards. At the root of this Community trade mark (CTM) dispute -- a complex plot of corporate issues, incorporations, mergers and dissolutions -- were questions relating to subjective intention and the objective
utilization of the Pangyrus's UK unregistered trade mark COLOURBLIND,
invoked in invalidity proceedings against the CTM for the same word.

This dispute hinged on the difficulties in determining (i)
who owned the unregistered Colourblind mark, created and used since 1991 to identify learning toolbox software created by RSVP's design director Geoff Cox, and, consequently, (ii) whether
the COLOURBLIND CTM was legitimately filed, as Pangyrus claimed to
own the rights in the unregistered trade mark in the view of its
relationship with Mr Cox.

Three companies asserted rights over the disputed sign:
Pangyrus (the applicant for invalidity and the appellant before the General Court, which was in
principle Cox's company, through which he marketed the Colourblind
product[apparently
in Cox’s own name before founding Pangyrus]since 1993; Future Factory, one of the companies in which Cox was
a shareholder together with a Mr Peacock: in 1998 Future Factory merged
with Pangyrus, giving birth to the Cordyn
Group, in which both Cox and Peacock had shares; and RSVP, a company founded by Cox, after resigning from Future Factory and Pangyrus in 2003.

Following Cox's resignations, he formally assigned all rights in the
unregistered Colourblind mark to RSVP, which successfully applied to register COLOURBLIND as a CTM the same year. Six years later Pangyrus, believing that it owned the Colourblind unregistered mark, filed an
invalidity action based both on relative grounds under Article 8(4) of Regulation 207/2009 (use of an earlier unregistered mark of more than local significance) and bad faith under Article 52(1)(b) of the same Regulation. The Cancellation Division upheld the action, but the Board of Appeal reversed that decision in a decision that the General Court has now upheld.

The
Board of Appeal had determine whether the unregistered mark was (i) used in the course of trade, (ii) of more than mere
local significance, (iii) before the CTM application was filed and (iv) capable of preventing use of the CTM in the UK under the law of passing off. As regards the first ground, Pangyrus relied on the common-law tort of passing off, in that, together with Future Factory, Pangyrus created the goodwill in COLOURBLIND and that RSVP had misrepresented its product by selling it under the same mark, threatening to cause real damage. Regarding the passing-off point, a good place to start is the dictum of Mr Justice Arnold in Och-Ziff Management Europe Ltd &
Another v Och Capital LLP & Another [2010] EWHC 2599 (Ch), that

“the basis of passing-off
is a misrepresentation causing damage to the claimant’s goodwill
and there are few a priori limits on what the misrepresentation may
be or how the damage may arise: the case in which the defendant’s
goods are sold as and for the goods of the claimant is now recognised
as no more than a special instance of a more general rule”.

Pangyrus however failed to establish its entitlement to the unregistered mark through its use before the CTM was filed. On the facts, Future Factory was the sole supplier of Colourblind products and Pangyrus could not show a significant use of the unregistered mark. Nor was Pangyrus able to demonstrate that it granted Future Factory either an express or an implicit licence to use Colourblind: it was thus the latter which built up the goodwill in relation to the Colourblind sign. The General Court upheld this conclusion.

According to the Court, Mr Cox was indisputably the creator of the COLOURBLIND product
and the sole user in his own name of the unregistered mark
prior to Pangyrus' incorporation. In evidential terms, invoices relating to the sale of the product only referred to trade mark use by Future Factory. The
argument that the corporate structure allowed Pangyrus to retrieve an
implied licence from Future Factory was rejected; the invalidity action only could have
been brought by the unregistered mark's proprietor, this being the
natural or legal person using the mark.

The
Board of Appeal also dismissed the argument that RSVP acted in bad faith at the
filing of the application, according to Article 52(1)(b), in that no formal agreement between Cox and Pangyruson the unregistered
Colourblind mark existed at the time of
their partnership and that there was no proof of that the mark had been transferred from Pangyrus to Cox. Said the Board, bad faith must
be assessed in the light of dishonest conduct and be measured under
objective standards, since subjective intentions could not on their own have any
bearing in such determination. It
followed that the alleged 'common
understanding' or Pangyrus's 'belief'
that it could rely on its ownership of the unregistered
mark following the end of Pangyrus's collaboration with Cox could not
stand. In any event, such evidence as Pangyrus did submit -- the merger agreement of
1998, a letter addressed to the national tax authority and the Future
Facory's business plan at the time of the partnership -- did not support a finding of bad faith, either because
it did not concern the ownership of the unregistered mark or
because it referred to corporate structural issues and said nothing about the transfer or the licence of the
unregistered mark to Pangyrus.

On the subject of bad faith, the General Court had quite a bit to say. It referred to the Court of Justice of the European Union (CJEU) in Chocoladefabriken
Lindt & Sprüngli (Case C-529/07), pointing out that instances in which bad faith is found are only examples of circumstances from
which a finding of bad faith can be reached following an examination of the facts and circumstances of each case, taking account of matters such as the origin of the contested sign, the nature of its use since its creation, the commercial logic behind its filing
and all events that led to the application being filed.

In this case, said the Court, when applying for the mark Cox was a
well-informed person; he knew of the use of the sign first by Pangyrus and, after the merger, by Future Factory, as he had been involved in both
companies' activities from 1993 to 2003. However, such awareness could not
count as bad faith. As for Cox's own intentions, according to the
Court, he did not want to stop Pangyrus using the Colourblind
sign, but nor was there any common understanding that the mark belonged to Pangyrus.

So where does this decision leave us? We know that bad faith is easier to allege than it is to prove, and the fact that one party feels personally aggrieved by his perception of the conduct of the other party often provides the motivation to challenge a trade mark application or registration even when evidence is scant or of little persuasive value. Anyone raising bad faith as a ground must be warned, though, that it is ultimately a court that must be persuaded; it is not enough to persuade oneself.Test yourself for colour-blindness hereTreatment for colour-blindness hereAre cats colour-blind here

Thursday, 26 February 2015

On 21 January fellow Kat Darren posted "No pain for Actavis - Warner-Lambert fail to stop launch of generic pregabalin" (here). This blogpost reported the Patents Court ruling of Mr Justice Arnold in Warner-Lambert Company, LLC v Actavis Group Ptc EHF & Others[2015] EWHC 72 (Pat). In short, Warner-Lambert (part of the Pfizer group) had a patent for pregabalin, which it sold as a treatment for epilepsy, generalised anxiety disorder ("GAD") and neuropathic pain under the romantic-sounding trade mark LYRICA. While the original product patent expired, leaving competitors free to make and sell their own pregabalin, Warner- Lambert received a "second medical use" patent claiming the use of pregabalin or a pharmaceutically acceptable salt of it for the preparation of a pharmaceutical composition for treating pain, and use according to Claim 1 where the pain for which it is prescribed is neuropathic pain. A generic pharmaceutical company marketing pregabalin for that purpose (but for no other) would infringe this indication.

What normally happens here is that the generic company can launch a product with a "skinny label", this being edited product leaflet that mentions only the permitted indications. However, in reality, since prescriptions do not mention the indication for which a drug is prescribed, neither a pharmacist nor a generic manufacturer will know the reason why pregabalin was prescribed. This poses huge practical problems for Warner-Lambert when pondering how best to enforce its patent rights. Refusing interim injunctive relief, Arnold J noted:

" ... the best solution to the problem which arises in this case is to try to ensure that prescribing doctors prescribe pregabalin for the treatment of pain by reference to the brand name Lyrica rather than by reference to the generic name pregabalin. That will ensure that pharmacists only dispense Lyrica when presented with prescriptions for pregabalin which are (at least so far as the prescriber is concerned) for pain without requiring the pharmacist to know the indication for which pregabalin has been prescribed.

The parties were back in court again pretty soon, as Darren's follow-up post explains. In "Warner-Lambert v Actavis Mark 2, still at first instance: more on Swiss claims, Skinny Labels, and no Strikeout" (here), posted on Friday 6 February. This time, at [2015] EWHC 223 (Pat), Actavis sought to strike out Warner-Lambert's action while Warner-Lambert applied to amend its particulars to as to plead a case of subjective intention. Arnold J refused to strike out the infringement action and to allow amendment of the particulars of claim in what he described as a "developing area of the law".

Today's news was broken to this Kat by a couple of comments posted by anonymous readers. One read

"Today was the showstopper! Pfizer sought and got a High Court Order against the NHS [that's the National Health Service] requiring it to issue central guidance that when pregabalin is prescribed for pain the prescription must say LYRICA. This is a big first in the enforcement of a second medical use patent. Very innovative Court application by Pfizer based on the NHS being an intermediary or conduit and relying on jurisprudence from trade mark and ISP cases eg Cartier[this being another Arnold J decision, extending relief through blocking injunctions against ISPs from copyright infringements to trade mark infringements: judgment here, Eleonora's Katpost here]. So, there will be no pain for anyone now- the position is clear and simple!"

Another said:

"After today the IPKat can change its headline " Pfizer gets the best pain relief imaginable" - an Order from the High Court that NHSE must issue central guidance that prescribers must prescribe LYRICA when using pregabalin for pain and for those prescriptions pharmacists must dispense LYRICA. That's a super neat solution and is far better than any preliminary injunction against one or more generics. Pretty impressive strategy by Pfizer!"

Darren will surely be adding to this topic when the opportunity arises.

Copyright has increasingly become linked to
de-materialisation of both works and their exploitation channels, so it is kind
of re-assuring to find cases that are still about the analogue world.

This morning the Court of Justice of the European
Union (CJEU) issued in fact its decision [not yet available on
the Curia website] in Case C-41/14 Christie's
France, a reference for a preliminary ruling from France seeking
clarification as regards that peculiar creature of EU copyright known as
artist's resale right, or droit de suite[Merpel
explains that this phrase does not mean right to a (hotel) suite, but rather
the "right to follow" the sale of one's own artwork]within Directive 2001/84/EC(the
Resale Right Directive)

As this very blog reported a few months ago, despite its
appearance as a case concerned with a specialist (and possibly pretty niche) area of copyright, Christie's France is yet another CJEU decision dealing with the relationship between IP rights and contract law [to this end readers will promptly recall
the very recent judgment in Ryanair, here].

Background

Article 1 of the
Resale Right Directive sets an obligation for Member States to provide for
the benefit of the author of an original work of art an inalienable,
unwaivable resale right. This consists of the right to receive a royalty
based on the sale price obtained for any resale of the work, subsequent to the
first transfer of the work by the author.

It's not droit to a suite ...

Article 1(4) further
states that:

"The royalty shall be payable by the seller. Member States may
provide that one of the natural or legal persons referred to in paragraph 2 [sellers, buyers or intermediaries art market professionals, such as
salesrooms, art galleries and, in general, any dealers in works of art] other than[that's the important bit] the
seller shall alone be liable or shall share liability with the seller for
payment of the royalty."

Christie's Francedecided to change its
terms and conditions so that the buyer, and not the seller, became liable to
pay the royalty. The issue thus became: can a contract derogate from the
seller’s obligation to pay the royalty as is enshrined in the Directive?

The Syndicat National des Antiquaires
(SNA) did not think so: it actually took the view that, in placing the onus of
the resale royalty on the buyer, Christie’s France’s general conditions
amounted to unfair competition.

Thus litigation ensued, and the Court
of Cassation decided to stay the proceedings and seek guidance from the CJEU.

The following is the
question that the French court referred to the CJEU:

"Must the rule laid down by Article 1(4) of Directive 2001/84/EC ... on
the resale right for the benefit of the author of an original work of art,
which makes the seller responsible for payment of the royalty, be interpreted
as meaning that the seller is required definitively to bear the cost thereof
without any derogation by agreement's being possible?"

The CJEU decision

As stated in the relevant press release, this morning the CJEU held that "[t]he cost of the royalty that has to
be paid to the author on any resale of a work of art by an art market
professional may be borne, definitively, by the seller or the buyer".

.... but rather the droit to follow resale of artworks

According to the Court,

"[T]he
Member States alone may determine the person liable for the royalty. Although
Directive 2001/84 provides that the person by whom the royalty is payable is,
in principle, the seller, it none the less allows for a derogation from that
rule and thus leaves the Member States at liberty to specify another person
from among the professional persons referred to in the Directive who, alone or
with the seller, will assume liability for the payment of the royalty. The
person who has been designated in that way by national law as the person by
whom the royalty is payable may agree with any other person, including the
buyer, that that other person will definitively bear, in whole or in part, the
cost of the royalty, provided that acontractual arrangement of that kind does
not affect the obligations and liability which the person by whom the royalty
is payable has towards the author ... [S]uch a derogation is in keeping with
the Directive’s objective of bringing to an end distortions of competition
in the art market, since the harmonisation concerned is limited to those
domestic provisions which have the most direct impact on the functioning of the
internal market. For the purpose of achieving that objective, thus
circumscribed, it is necessary to make provision as to the person liable
for payment of the royalty and as to the rules for establishing the amount of
the royalty. However, such provision is not necessary with regard to the
question as to who, definitively, will bear the cost of the royalty.

The
Court does not exclude the possibility that such a derogation may to some extent
have a distorting effect on the functioning of the internal market. However,
such an effect is only indirect since it arises as a result of contractual
arrangements that are independent of the payment of the royalty to the
author, for which the person by whom the royalty is payable remains
liable."

A more detailed analysis will follow as soon as the
judgment becomes available, so: stay tuned!

"Opstelten: uitspraak rechter geldt niet voor Europese instelling" is the title of an article in this morning's edition of Dutch newspaper de Volkskrant, which brings tidings of the latest twist in the battle over the European Patent Office's governance. You can read it here in the original Dutch or run it through the online translation service of your choice.

The bottom line, as summarised in an EPO staff communication, is this:

"The president has just received an official notification from the Dutch government which has decided to undertake some first actions to ensure that the judgement is not executable".

The gist of the article in de Volkskrant is that the Dutch Minister of Justice Ivo Opstelten has made a decision on the basis of the EPO's immunity from execution of court orders under international law, an immunity which the Court had previously lifted. Whether the minister is correct, either in terms of law or in terms of policy, appears to be open to question.

This moggy, having struggled to comprehend the English version of the article is grateful to Bart van Wezenbeek (European Patent Attorney and Senior Associate, V.O.) for the following:

I have not been able to find the official statement of Opstelten and it is also unclear whether Opstelten would have said this as an announcement from the government, from the ministry or on personal title in an interview.
In the news item two legal scholars are quoted who criticize the statement: Hans Engels is quoted to say that “Legally he may be correct, but in view of our constitutional system, this appears to be very strange. It is remarkable that this kind of powers reside with a minister. And I do not express myself in a positive way here”.
Further, prof. Cedric Reyngaert (Univ. Utrecht) is quoted: “In fact he is eroding the power of the court. International organization will continue to put themselves above the law, although that already is a problem. Opstelten finds his basis in some law of the ’70s. That should be applied dynamically, but he is taking a very conservative view”.

In a further development, this moggy understands that the President and the head of the Administrative Council have invited the Enlarged Board and the Association of Members of the Boards of Appeal (AMBA) committee to meet on 10 March. She very much hopes that something good and constructive will come from this but fears that, as so often happens, hope will not triumph over experience.

At this point the opinions of the patent fraternity become less helpful than those of specialists in international law and Dutch constitutional law. If readers can ask any of them for an expert input, that would be most helpful.

Was it only yesterday that this Kat, in his Wednesday Whimsies, posted a link to the UK Intellectual Property Office's The Patent Guide A handbook for analysing and interpreting patent data, which states:

"At present there are clear differences in perspective between professional patent experts, researchers undertaking patent analysis and the audience for this research, which includes governments, the press, businesses and individuals. Such differences increase the possibility for incorrect analysis or inappropriate interpretation of analysis. Decisions based upon this could be incorrect and potentially harmful".

Funnily enough today the European Patent Office publishes some patent data on which this Kat's friends at the Chartered Institute of Patent Attorneys have already pounced, producing the following media release. Note the headline assertion that British business is failing to protect innovation, then read on. The media release reads, in relevant part:

EUROPEAN FIGURES SHOW
THAT BRITISH BUSINESS

IS FAILING TO PROTECT
INNOVATION

Figures released today ... by the European Patent Office show
that, while UK patent filings have increased since last year, domestic
businesses are falling behind the rest of Europe in protecting and exploiting
their intellectual property.

The EPO released its annual report today which shows that UK filings
have increased 4.8% compared to 1.2% average growth across Europe. This was the
highest growth in UK filings since 2011.

However, the figures also show that of the seven leading European economies,
only Italy is below Britain, both in terms of patent filings per $US billion of non-service
Gross Domestic Product and per head of population (see graphs).

Leading patent attorney Matt Dixon said, on behalf of CIPA: “British
businesses need to wake up and realise that patents ... are a key part of everyday innovation strategy. Without protection for their products, British businesses leave
themselves wide open to competition from lower cost economies, such as China,
who can simply copy technology with impunity. In an innovation economy, where 80% of a business’ assets are
intangible, companies cannot afford to fail to protect the fruits of their
product development.

“The UK is only slightly better than Italy in the rate of European
patent filing per head of population and way behind Germany, France, Sweden,
Switzerland and the Netherlands.

“Even if
account is taken of the UK’s significant
service sector, where less patenting would be expected, the picture remains the
same; Britain has fallen behind other European countries.”

This Kat wonders how such a depressing conclusion can be drawn from the data in question and he hopes that readers may be able to assist him, either by showing him how it can be done or by showing that it can't. He struggles to understand why either the number of patent filings per $US billion of non-service Gross Domestic Product or the number of patent filings per head of population should reflect a failure to protect innovation, especially when

the patent system only covers some forms of innovation but not others,

innovations in, for example, processes which cannot be reverse-engineered may be better exploited commercially by not filing for a patent,

there exist other intellectual property rights which, when deployed individually or in combination with one another may provide better, longer or cheaper forms of protection,

the number of patent filings may reflect norms of professional advice which vary as between countries

to name but a few factors that may be of relevance. This Kat hopes that he will receive responses from economists and statisticians -- and in particular from members of the IPO's Informatics team, whose big chance this is to prove themselves.

Wednesday, 25 February 2015

This post returns to the subject of patents in Europe, but in a very different context from that which has been exercising so many of our readers of late. Here the IPKat hosts the third in the series of posts from London-based law firm Bristows (where guest Kat Tom works) on its real-time experiment in litigating before the proposed Unified Patent Court (UPC).

This series is masterminded by Alan Johnson and Alexandria Palamountain and the first two reports are "A test-drive for the Unified Patent Court" (June 2014, here) and "A test-drive for the Unified Patent Court: Part II" (October 2014, here). And now ...

The story so far

Getting dogs to obey is easy; getting litigantsto obey case management may not be ...

Following fairly typical
pre-action correspondence with the patentee threatening infringement
proceedings, the action kicked off in April last year with a pre-emptive
application by the potential defendant to revoke the patent in the London
branch of the Central Division. In
response, the patentee made an objection under Rule 19.1(a) of the 17th edition of the Draft Rules, that is a preliminary objection to the
jurisdiction and competence of the Court.
While the application looked “ambitious”, Judge-Rapporteur Rieu (a
Solicitor and Member of the Paris Bar working at Bristows) did not simply
dismiss the application, but used her case management powers to order the claimant
to produce evidence to it had implicitly referred so that the defendant could
know the full case it had to meet before serving its defence, and extended time
for service of the defence commensurately.
This was something of a surprise to the claimant (and probably the defendant
too), but when one looks closely at the case management powers in the UPC
Rules, they are incredibly wide.

Next steps

The claimant was given a
reasonably tight deadline to provide its further evidence, and as so often
happens in real life, one fact witness who had seemed helpful decided not to
cooperate and refused to sign a witness statement. However, it served an expert report and one
of the two witness statements required by Judge Rieu’s order. As a result of the further investigation with
the witnesses (and the gap caused by the uncooperative witness) the claimant
also modified its Statement of Case. Neither
the defendant nor the Court (so far at least) has taken any objection to this,
and the defendant then duly filed its defence within the revised time
limit. One might have expected it also
to have counterclaimed for infringement, but it did not. Instead, it allowed the defence, reply and
rejoinder to be served before bringing a separate action for infringement in
the London local division, adding a second patent into suit.

Too much bifurcationcan take a heavy toll ...

This move by the patentee
is perfectly permissible under Article 33 of the Unified Patent Court Agreement
(UPCA)
which specifically permits patentee defendants to central division UPC actions
to being local (or regional) division infringement proceedings instead of
counterclaiming for infringement in the central division. However, what could be the motivation? For reasons not immediately apparent, the
patentee seemed to want de facto
bifurcated proceedings, even though (in contrast to the German experience) the
validity hearing would be before the infringement hearing. Might the patentee have been concerned to
construe its claims narrowly to secure a finding of validity? Or did it have in mind some tactic to do with
Rule 70 which then comes into play? This
requires that the President of the Court of First Instance is informed of the
existence of the two sets of proceedings and that, if a counterclaim for
revocation is included in the infringement action, the central division action
must stay its revocation proceedings pending a decision by the local division
as to how to proceed.

This would suggest that
the progress of the action would lie in the hands of the infringer. If it pleaded invalidity as a defence (which
requires it to counterclaim for revocation) its revocation action would be
stayed and the trial date lost. Against
that, if it did not plead invalidity, but only non-infringement as a defence,
this would avoid postponement of the revocation case in the central division
but create a second set of proceedings and further expense and uncertainty.

However, instead of
letting matters take their course, the Court took the initiative. It invoked its powers under r.340 and
summoned the parties to discuss joinder of the two actions. The hearing took place on 16 February,
involving the judicial panels of both divisions.

At the hearing all was
revealed as to why the patentee had not counterclaimed for infringement, but
had instead brought its separate local division action. It said that it believed that the central
division did not have jurisdiction to hear an infringement action concerning
the second patent which had been infringed only in the UK and was not the
subject of the revocation action; and. since it had wanted the two infringement
cases heard together, it considered it had no choice but to start the local
division action -- although this did not explain the delay in bringing its
local division action which it attributed to the time taken to collect the
necessary evidence.

The alleged infringer
thought it too early in the local division proceedings to join the two actions
together. It cited the provision in R.340
that Article 33 should be respected and drew attention to the rules (70.3 and
37) which relate to how local division actions should proceed in circumstances
such as this where there is a pre-existing revocation action. It noted that, under these rules, there was
to be no decision about how to handle the case (as regards bifurcation) until
after close of pleadings. It also
expressed concern that its revocation action should not be derailed by joinder
of the two actions. Neither did it want
to have its ability to prepare its response to the infringement claim
prejudiced by having time limits shortened so that the infringement part of the
case could catch up with the revocation case which was otherwise heading to an
interim conference in April and an oral hearing in July.

The court decided that it
had the power under R.340 to join actions together at any time when they
concerned the same patent (as here), albeit another patent in addition. It noted that the only requirement was that the
actions were both "pending".
It considered the option of allowing two sets of related proceedings to
continue in parallel to be undesirable, especially given that the central
division proceedings would mandatorily have to be stayed if there was a
counterclaim for revocation in the local division action.

Implicitly criticising rule 70, it reasoned
that it need not wait to see what happened, knowing that there could then be a
significant delay. It equally thought
that the only way delay could be avoided without joinder was to permit the two
actions to continue in parallel which it thought a waste of court resources, as
well as dragging out the dispute as a whole.
It did not think respecting Article 33 required it to wait to see if
Rules 37 and.70.3 needed to be applied.

In view of this, the
court decided to conjoin the proceedings and set a timetable which meant that
the dates proposed for the interim conference and oral hearing could
maintained. To do so, it abridged the
court time limits for pleadings in the new conjoined action, and permitted the
alleged infringer as much time as possible for its steps (primarily to serve
its defence), leaving the patentee with a very tight time limit (just one week)
for its reply and defence to counterclaim.

The court decided that
the requirement to respect Article 33 would be met by having the local division
hear the conjoined action. It reasoned
that the object of Article 33 was to give primacy to local and regional
divisions at the expense of the central division.

In the light of this, the
shape of the action is now a traditional action for infringement with
revocation counterclaim, despite the previous procedural manoeuvres of the
parties. Whether in the real system the
court would be as proactive as this -- particularly as this involves different
court divisions cooperating -- remains to be seen. Also, the timings only just permitted the
court to take this course.

There was no available artwork for"ducking the question", but we foundthis one for "questioning the duck"

So, under R.340, did
these judges make the right decision?
Does the power under the rule permit joinder at any time? Does it include a power to join actions which
involve the same patent, but also a different patent? And what does respecting Article 33 really
mean? But perhaps the most
interesting aspect of this latest instalment is to highlight an uncertainty as
to the scope of R.49.2(b) (“The defence to revocation [actions in the central
division] may include ... a Counterclaim for infringement”). Is a patentee sued for revocation in the
central division limited to a counterclaim for infringement of just that
patent, or can it include another patent in its counterclaim if it wishes? This would certainly be the most efficient
use of party and court resources, but do the rules permit it? On this the Bristows court took the
diplomatic course of ducking the question ...

The next stage is the
interim conference scheduled for 14 April.
The Kats' friends at Bristows have promised to keep us all posted.

At this stage it does all seem very daunting, partly because of the unfamiliarity of the proposed new system and partly because of the wide range of options that appear to result from its remarkable flexibility. For litigants and their professional representatives this will mean careful planning, a mastery of game theory and, at least initially, some labour-intensive thinking, says Merpel.

EPO and a Kat's reproach. A little over 24 hours ago, the IPKat's faithful friend and colleague Merpel posted the news that the UK's Intellectual Property Office (IPO) had issued a statement concerning the current situation in the European Patent Office. The IPO indicated its interest and gave contact details for anyone who wanted to ask it any questions. Since then nearly 15,000 readers have received that blogpost by email or visited it directly, and getting on for 50 readers' comments have been posted -- many of them highly critical of the IPO or just plain rude. To date, however, only three people (bless them) have taken the trouble to contact the IPO, two of these being from outside the UK. This Kat finds the level of response highly disappointing, also noting that no comment suggests that any other national offices have publicly indicated that they are taking any interest and that they are willing to speak to stakeholders. He suggests that a better and more constructive approach to take is to engage with national offices on a mature level and to encourage them to understand the current menu of problems as well as you, our readers, do. This may not bring immediate benefits; indeed it may not bring any benefits at all -- but it is surely more likely to do so than to expect governments and their representatives to discern the truth by piecing together lengthy strings of blog comments. Bottom line: if your national IPO listens, speak to it. If it doesn't, try to find out why. And thanks once again, UKIPO, for at least making the effort to say something [and can we please hear a bit more, adds Merpel, preferably from a Minister].

Patents and statistics: a guide. This Kat has just got the link to The Patent Guide
A handbook for analysing and interpreting patent data, an e-pamphlet from the UK Intellectual Property Office's Informatics team [Merpel explains: "Informatics" is a hybrid word formed from "Information", because it's useful, and "Rheumatics", because it can be a real pain]. According to the team:

The study of patents has been approached with increased
enthusiasm in recent times. At present there are clear
differences in perspective between professional patent
experts, researchers undertaking patent analysis and the
audience for this research, which includes governments, the
press, businesses and individuals. Such differences increase the possibility for incorrect analysis
or inappropriate interpretation of analysis. Decisions based
upon this could be incorrect and potentially harmful.

This handbook has been created to improve shared
understanding between patent experts and those undertaking
or using patent research.

Ostensibly 28 sides long, its operative part is a good deal shorter, so check which pages you really want before you print it out. Future editions are already being planned, which propose to embrace analysis
and interpretation of statistics on other intellectual property rights (IPRs).
If you want to discuss the content of this handbook or suggest future
content, this is your big chance: you can email the Informatics team at
informatics@ipo.gov.uk.

Around the weblogs. There's plenty going on in the Benelux region these days. Apart from the decision of the Gerechtshof den Haag in the now notorious matter of the European Patent Office and human rights [Merpel's wondering if any other IP blogs are regularly covering these developments; her favourite ones aren't], the MARQUES blogs Class 46 and Class 99 have been picking up on some hot stuff. On Class 46 veteran Katfriend Gino van Roeyen comments on a Benelux office trade mark ruling in an opposition involving traditional Zeeland dress and Denise Verdoold explains why IUS is no use as a trade mark for legal services in Belgium, while Class 99's Hidde Koenraad reports on incremental developments over earlier designs as viewed by The Hague's interim relief court. Mark Anderson, on IP Draughts, speculates as to what will happen to the market for reproduction 'designer' chairs once the UK has brought them all back into copyright protection. Finally, IP Finance's Rob Harrison updates us on the battle over Nespresso's coffee capsules in Germany -- this Kat had no idea that the market for these things was so large, or of the possibility that as many as 1,700 patents might govern them.

Scents and sensibilities II. Following this morning's post ("Scents and sensibilities: how far can copyright stretch?", here) on the BLACA-IPKat Sensory Copyright event, this Kat has now received the PowerPoint presentations both from Eleonora (here) and from Tobias (here). On the right you can see Eleonora and Tobias holding samples of HEKSENKAAS, the product on which the Dutch judiciary will soon have to pronounce as to the copyright-protectability of its taste. The product is reported to be a combination of cream cheese, mayonaise, leek and garlic, so you might want to experiment with it in the privacy of your own kitchens. Meanwhile, if you want to get a taste of Dutch jurisprudence on the subject of taste protection, here's a link to an English translation of the decision in Kecofa v Lancôme.

Last week this Kat attended "Geographical Indications: FAGE, Feta, Fontina, and the battle for world markets", this being a seminar organised by AIPPI UK and held in the cosy comfort of the London office of Freshfield Bruckhaus Deringer. The speakers wereWolf Meier-Ewert (Counsellor, IP Division, World Trade Organization) and Dev Gangjee (Associate Professor, University of Oxford). In the chair was Sir Richard Arnold, who will rarely have an easier time chairing any event: both Wolf and Dev were as charming as they were fluent and, since they had carved up the topic so well between them, there were no problems of overlap or of important issues falling between the two of them. There were exactly the right number of questions to fill the gap between the last audible syllable of Dev's presentation and the first confident crunch of teeth on canapés as the reception got underway.

This event being conducted under the Chatham House Rule[though this Kat can't for the life of him see why], it would be imprudent for this Kat to pin the things that were said to the people who said them -- though he can say that the speakers reviewed the historical context and development of GIs, the international structure of GI protection, the tensions between those nations seeking protection through trade mark registration and the larger number that prefer sui generis rights. Also covered were issues of genericity, the extension of protection beyond consumables to manufactured craft products and prospects for a future in which bilateral trade agreements are increasingly forcing the pace.

Smoky checks the cupboard for PGIs ...

This Kat asked his usual question about why there doesn't seem to be any research into the extent and effect of "GI creep", as amendments to GI registrations in the European Union are increasingly amended, usually either to cover a larger territory or to reduce the criteria listed in the specification which require compliance if use of the GI is to be permitted. He also made the point that there's little advantage to be gained by most businesses in the EU in promoting the PGI logo (above, left) which only 8% of consumers apparently recognise: by promoting it they are also promoting their competitors at the top end of the market who are also entitled to use it, while promotion of their own trade mark should give them a better return on their marketing expenditure. The important thing, he thinks, is that the logo should be recognised and respected by competitors, distributors and retailers.

Scents and sensibilities. Yesterday's joint BLACA-IPKat event on sensory copyright (on which see earlier Katpost here) was a great success. Arguing that copyright law was already capable of protecting original smells and tastes, Eleonora Rosati led the audience through the line of Court of Justice of the European Union rulings, from Infopaq to Painer, that appeared to undermine the rigidity of the United Kingdom's "closed" system in which only listed types of work could be protected. Arguing that we should be thinking in terms of what constituted a "production" in terms of Article 2 of the Berne Convention, she also drew support from the provisions of TRIPS and from dicta in recent English decisions. Tobias Cohen Jehoram opposed the notion of such protection, observing that lawyers have the ability to create their own reality and that, in his father's words, the Dutch Supreme Court ruling that perfume was copyright-protected, in Kecofa v Lancôme, was "all sails, no anchor". Sensory copyright made no sense in legal, practical or commercial terms, he maintained, listing the many problems that must be addressed when the corpus mechanicum is combined with the corpus mysticum (this is a polite way of saying that you can't detach a smell or taste from the physical object from which it emanates).

What happened next? Following the presentations, a lively and highly interactive discussion ensued. Dutch IP litigator Sven Klos stole the show with his cameo role as not only the lawyer who will be arguing these issues against Tobias for real in a Dutch court next month, but also as the generous provider of samples of a product which, he demonstrated to the satisfaction of many, actually had a new and original taste.

... unless they are Kats

Thank-yous. Many thanks go to Reed Smith LLP, for letting us use its lovely facilities, even if the building is so big that you can't actually find it, to the speakers, to Sven Klos for bringing his own tasties and to Sir Richard Arnold, for maintaining the excellent record that members of the IP judiciary in England and Wales have for attending public events, making themselves available to discuss their subject matter and generally showing how much they care about this field of law. Other contributors to the vitality and intellectual cogency of the event included long-term Katfriend Alexander von Mühlendahl and Brigitte Lindner, to whom this Kat also offers his thanks.

More to come. The IPKat looks forward to making the PowerPoints of the two speakers' presentations available on this weblog once he has received them. Tobias is also letting us have a copy of an English translation of Kecofa v Lancôme. There is no truth in the rumour that the smells referred to in the seminar will be hosted on Google Nose ...

Cash for access has alwaysbeen with us ...

Cash for access. The British media have been carrying many reports in recent days on another "cash for access" scandal, with eminent politicians allegedly selling to business clients their ability to provide access to members of the government whom it might not otherwise be possible to approach. BLACA, too, has a "cash for access" programme -- but one which is entirely lawful and indeed perfectly laudable. On payment of a moderate sum -- less than £1 a week -- by way of a membership fee you can procure access to all BLACA's regular meetings, not to mention a substantial discount on the fee for certain other events. There is also a student discount. You can sign up by clicking here. Can't be bad, says this Kat.

Tuesday, 24 February 2015

Earlier today this Kat posted this note on Supreme Petfoods Ltd v Henry Bell & Co (Grantham) Ltd[2015] EWHC 256 (Ch), the latest in a line of important trade mark rulings from Mr Justice Arnold in the Chancery Division, England and Wales. That note sought to cover the decision as a whole; the following analysis from guest contributor Tim Behean (Sipara, Oxford) focuses on just one aspect of this multifaceted ruling: burden of proof in so-called "double identity" actions in which the mark used by the defendant is identical to that of the claimant and the goods or services of the respective parties are exactly the same too. This is Tim's take on this topic:

Supreme Petfoods v Henry Bell & Co: why the Court of Appeal was wrong in Interflora on the burden of proof in "double identity" cases

Supreme Petfoods is remarkable for Arnold J’s tour de force analysis of the CJEU’s case-law on the double identity rule (Article 5(1)(a) of Directive 2008/95 and Article 9(1)(a) of Community Trade Mark Regulation 207/2009), and for his conclusion, disagreeing with the Court of Appeal in Interflora Inc v Marks and Spencer plc[2014] EWCA Civ 1403, that the burden of proving that any of the trade mark functions is prejudiced falls on the trade mark owner.

The double identity rule has many important implications. One is the challenge for businesses to find and clear new trade marks over the vast quantity of marks now registered, and the practice of some trade mark owners to file broadly, covering many if not all goods and services within classes of potential interest. In this way they can secure protection for their marks, most directly by oppositions, for wide ranges of goods and services for which they will never be used, despite the potential for other uses of the same mark which will cause no confusion in the marketplace.

No relation ...

The facts of the case in brief are that the claimant owns a UK registration for SUPREME as a word mark, and various other UK and CTM registrations for SUPREME with design elements. It had used these marks for petfoods since 1990, and due to the long use, the mark acquired a “slender degree” of distinctive character for small animal foods – though it was descriptive and declared invalid for other goods. The defendant and its predecessors had used SUPREME on its packaging for some 20 years, with no evidence of confusion. Accordingly, Arnold J was able to find no infringement under Article 5(1)(b), or under Article 5(2); that the defendant had a good defence of descriptive use under Art 6(1)(b) and there was no passing off.

As for Article 5(1)(a), this was a case of honest concurrent use within the Court of Justice of the European Union (CJEU) ruling inBudejovicky Budvar NP v Anheuser-Busch Inc. However, as there are important uncertainties and contradictions in the CJEU’s case-law, Arnold J reviewed it to discover in particular what it reveals about the burden of proof on the requirement for prejudice to trade mark functions. The analysis is from paras 83 to 164; a mere summary would not do it justice. What emerges is that the CJEU has developed seemingly different approaches for different types of case, and no express decision on burden of proof in any of them, only suggestions from the way the court expresses its rulings.

(1) The “normal case”. This is where the defendant uses the same mark in relation to the same goods, unconnected with the trade mark owner. In such a case, it is inherently likely that there will be confusion, and this is an important protection for trade mark owners, especially in counterfeit cases. Arsenal v Reed is an example, and contains the first statement that the double identity provisions are to be interpreted as requiring in addition a prejudice to the trade mark functions. Here emphasis is placed on the origin function, and this “normal case” is most consistent with TRIPS Art 16(1), that there is a presumption of confusion, but which can be rebutted by the defendant. However the TRIPS presumption deals only with confusion (the origin function). What about the other functions (quality, communication, investment and advertising)? There does not seem to be any reason why they should be presumed, Art 5(1)(a) does not require a trade mark with a reputation. They might be for the trade mark owner to prove. But on the other hand it would be more consistent to treat them as presumed in the same way as confusion.

(2) Exhaustion of rights. Parallel import cases where the trade mark owner’s goods are imported from outside the European Economic Area (EEA) and are first put on sale in the EEA without the trade mark owner’s consent. In the CJEU cases starting with Silhouette, it is established that this amounts to infringement under Art 5(1)(a). But the cases make no reference to this use being prejudicial to any of the trade mark functions, or even whether this is a requirement (similarly for the re-packaging cases where the defendant does not comply with the CJEU’s guidelines). These cases could be reconciled, however, on the basis that the trade mark functions we are concerned with are the right to decide which goods to sell under the trade mark in the EEA and how they should be marketed.

(3) Honest concurrent use. In these cases there is no adverse effect on the origin function, as consumers have become used to the position and there is little if any confusion. The burden of proof seems to be on the defendant. The other trade mark functions although mentioned in the decision, do not feature in the court’s answer to the question asked, but presumably they ae not affected by the concurrent use either.

(4) Keyword advertising cases. For these cases Arnold J refers principally to Kitchin LJ’s decision in Interflora, that the burden of proof is on the trade mark owner thereby overturning Arnold J at first instance. Arnold J responds that if this was intended to apply to cases other than keyword advertising, it is obiter, and criticises it for failing to take account of the CJEU case-law, a wrong interpretation ofClass International v Colgate-Palmolive(on exhaustion of rights), and as with the CJEU cases on keywords, failing to consider TRIPS Art 16.

Arnold J’s conclusion (paras 163-4) is that the position is unclear. But for this case it does not need to be referred to the CJEU and instead he adopts what he considers is the better view, more consistent with the case-law and TRIPS, that to establish infringement under Articles 5(1)(a)/9(1)(a), the trade mark owner need only prove the first five conditions [see ADDENDUM below]. If satisfied, the burden shifts to the defendant to show that his use does not prejudice any of the trade mark functions. An alternative might be that only a presumption of confusion is made, and then if the defendant shows there is none it is for the trade mark owner to show if he can that other trade mark functions are prejudiced. However, there would likely be no practical difference in many cases.
It is hard to avoid concluding also that he is saying that the Court of Appeal has made a mistake and reached a wrong conclusion. Is Arnold J’s conclusion only obiter because the case is really about honest concurrent use? Or the grand unifying theory of double identity?

Thanks so much, Tim, for your analysis -- it's much appreciated.

ADDENDUM: a reader has written in to ask what the conditions are. For the sake of clarification, here's para 83 of Arnold J's judgment:

"The six conditions. The case law of the CJEU establishes that the proprietor of a trade mark can only succeed in a claim under Article 5(1)(a) of the Directive or Article 9(1)(a) of the Regulation if six conditions are satisfied: (i) there must be use of a sign by a third party within the relevant territory; (ii) the use must be in the course of trade; (iii) it must be without the consent of the proprietor of the trade mark; (iv) it must be of a sign which is identical to the trade mark; (v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and (vi) it must affect, or be liable to affect, one of the functions of the trade mark [citations omitted]"

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